1. The collective journey
towards a decent, happy life
Presentation at StudentsxCEOs Summit
Bandung, June 4, 2011

2. Our vision
To help as many people as possible to exit
financial difficulties and achieve a decent
and happy life. Financial difficulties include
having low income, lacking of financial
management capability and access to capital
‘KASIH’ (LOVE) is the
foundation of what we do
SOURCE: KKI Koperasi KASIH Indonesia | 2

3. We chose Cilincing – one of the poorest area in Jakarta – as our pilot project
North Jakarta
Jakarta map
Poor household location split
Percent (100% = 67,104 households)
Cilincing
• Sub-district Cilincing contributes ~1/3 of poor
households (~19,000) in North Jakarta
• Kalibaru in Cilincing is one of the poorest
kelurahan in North Jakarta, with ~8,400 poor
households (83% from total)
SOURCE: Republika.co.id (Nov 26, 2010), KKI Koperasi KASIH Indonesia |

4. To date, we have been supporting 156 borrowers; They are typically a mother of
≥ 2 children, rent their house and earn monthly income of IDR 200-400k/person
To date, we have been supporting 140 borrowers …
… With following typical traits
Loan usage split Borrowers’ gender split
Percent (100% = 156) Percent (100% = 156) • Woman aged 30-50
3% • Married with ≥ 2 children, mostly
still in school
• Husband has low income or
Women
jobless
Men
• Rent a house/room
97%
• Family income of IDR 200-400k/
person/month
Other statistics • Own a TV, but no motorcycle/
% of client with income < 2 $/day : 96% refrigerator/ washing machine
Total disbursed loan : IDR ~90 million • Had borrowed from loan shark
Average loan/client : IDR ~580,000 • Do not have long-term
Clients’ savings collected : IDR ~7 million savings, only arisan* or
Non performing loan : 0% Achieved Ramadhan savings
Portfolio at Risk (PAR>30) : 0.7% without joint
Clients at Risk : 1 person responsibility
* Arisan is a group-based saving system, where one stored money regularly within a certain period and get the result in bulk, once within aperiod
SOURCE: KKI Koperasi KASIH Indonesia | 4

5. Ibu Ndih is an example of our typical client
Facts on Ibu Ndih
Aged 50, married with 6 children*
Sells cookies, cooking tools, collect
plastic trash at free time
Working 7 days/week, sleep 3
hours/day (from 23.00 – 01.00)
Husband works as freelance
construction worker
Rent a house, 6 x 6 meters
• Family income of IDR 200 – 300k
/person/month
• Only own a TV, no motorcycle/
refrigerator/ washing machine
• Participating in small social lottery
(‘arisan’) and Ramadhan savings
* 4 married, 2 still lives with her; She also cover some costs of her grandchildren
SOURCE: Jakarta Globe, KKI Koperasi KASIH Indonesia | 5

6. KKI holds a basic belief that giving loan is helpful but insufficient to really help
someone to exit poverty. Education and other supports are also essential.
Dream
Decent & happy life for all ☺
Goals Better income + capability + habits + beliefs = more assets & opportunities
1 2 3
Financial Education Supports
• Loan paid • Savings- • Bulk
weekly related purchasing of
Pillars and (majority), basic needs
foundation for • Business-
daily and related • Incidental
goals attainment
monthly supports, e.g.,
• Lifestyle &
• Savings facility habit-related after a fire
Continuous motivation and beliefs internalization
Starting point Current assets + income + capability + habit + beliefs
SOURCE: KKI Koperasi KASIH Indonesia | 6

7. We applied a multi-layered risk management system
Control applied
• Applicant’s character is checked during survey. Any doubt over a
person’s honesty will lead into application’s rejection
Selection
control • Survey result is then checked with current borrowers. Concern from
most borrowers will also lead into application’s rejection
• KKI provides many incentives (increase in loan amount, chance to get
housing and educational loan, various prizes and opportunities and
Individual
control some sanctions (legal process, family ban and locking of access to
other microfinance institutions)
• KKI started to apply joint responsibility (tanggung renteng) from the
141st borrowers onwards. Dishonest people might not get a group
Group control • It covers risk from (1) cash flow problem and (2) default loan, while
forcing members to collaborate and support each others
• Discipline applied in all interaction with KKI will help to control
Intangible subconscious part of borrowers to repay their loan
control • Proximity with Field Officers and branch’s staffs also reduces
possibility of defaulting
SOURCE: KKI Koperasi KASIH Indonesia |

8. Some of KKI moments ☺
Pre-disbursement training Disbursement
Games in 1st weekly meeting Winners got prizes!!!
SOURCE: KKI Koperasi KASIH Indonesia | 8

9. We are building a solid foundation in the 1st year to enable future acceleration
Full roll-out: Let’s go!
2nd pilot: Rural poor area
Building a solid foundation Year 3
Year 2
Year 1
Focus • Stress-test systems, • Develop 2nd office in 1 • Open 3rd and 4th offices
products, policies and rural poor area • Raise funding
curriculum • Raise funding • Develop strong talent
• Identify and develop talents • Identify and develop talents pool
• Establish legal entity • Improve systems further • Improve systems further
• Raise funding
Target 700 borrowers
99% performing loan
5,000 borrowers in the end of year 3
1% PAR at risk > 30 days
98% performing loan
IDR 50mn savings collected
Other targets will be defined in the
IDR 700mn funding raised
end of year 1
8 full-time field officers, 1
admin and treasurer hired,
and independently working
SOURCE: KKI Koperasi KASIH Indonesia | 9

10. Several thoughts on MFI
Koperasi KASIH Indonesia | 10

11. 3 words to summarize my opinion on Indonesia’s microfinance industry:
BIG, FRAGMENTED and EXPLODING
Description Reason/source
• The pie size is just too big to • UKM Center FE UI reported on
be served by one player; It is 2008 that there are ~50 million
BIG
available across Indonesia customers that still need
microfinance support
• There are various players with • Most of MFIs took form of
massive quantity: credit union, credit union (Koperasi Simpan
FRAGMENTED Pinjam) or BMT
BMT, venture cap., foundation,
BPR, commercial bank • They mainly serve local
needs, only some has national
• Biggest today is MBK Ventura scale, making the market
with 250k clients fragmented
• Many new, strong local and • This is driven by the wide
foreign players are entering “white space” available, and
EXPLODING
the market, e.g., Bakrie Group, potential for good profits
Bank Mandiri, Microinvest
SOURCE: Personal opinion Koperasi KASIH Indonesia |

12. Interested in this industry? There are multiple ways to get in. Your choice!
Description
• Options: World Bank, MICRA, Care International, others
Join NGOs • Why it makes sense: good to get the overview of microfinance
industry and how NGOs on this area work
• Why other options might be better: Less direct learning on the
business aspects
• Options: Commercial banks (Danamon, BTPN, Mandiri), BPRs,
Join existing Venture Capital (Mitra Bisnis Keluarga), Cooperatives (Koperasi Dian
MFIs Mandiri, Koperasi Mitra Dhuafa), BMT (BMT Ventura, owned by
Dompet Dhuafa), foundation (Yayasan Mitra Usaha)
• Why it makes sense: good direct learning on how to do the business;
Joining commercial banks means better salary ☺
• Why other options might be better: Joining commercial MFIs might
mean your activities are driven by profit-making mindset all the time
• Options: YOURS ☺
Create your own • Why it makes sense: Good learning on how to start and manage
your own business and about microfinance industry
• Why other options might be better: setting up own business means
higher risk and commitment, while being able to shape things the way
you want and potentially be more satisfied in many ways ☺
SOURCE: Personal opinion Koperasi KASIH Indonesia |

13. Wanting to start your own MFIs? Couple of tips from my 4-month experience
Description
• … that balances the opportunity (demand for microfinance services)
Pick the right and your resources (e.g., your knowledge and comfort with the area,
place … who you know in the area, etc.)
• … including the following:
Do the Get to know the area, e.g. to find types of product that are
homework … needed, characteristic of the people in the area, people whose
support you will need to start your business
Get to know this business, e.g., what are possible product
types, what are the risk management system, etc.
• … focusing on what you must have, not everything, starting from
Prepare long-term objectives, to 1st year objective, combine it with your SWOT
pragmatically … to define your strategy. Then translate your strategy into a product
design and operational system and its corresponding tools. Last,
prepare basic financial system to capture what happens
• Execution capability is what truly sets one MFI from the others, as
Set your heart, systems are widely known and tools are widely available
and EXECUTE! • So, set your heart for the journey (including all the challenges and
excitements), and do it!
SOURCE: Personal opinion Koperasi KASIH Indonesia |

14. Last 3 cents to be remembered
• In microfinance industry, you can make money while
helping people. Decide wisely between the two
• Indonesia’s microfinance industry will grow rapidly in
upcoming years. It needs Indonesia’s best talents.
Considering it as a career option might makes sense
• Going back to the 1st point, remember that microfinance
industry dealt with poor people – fellow Indonesians
that are much less-fortunate. They need your help to
achieve a better life. NEVER FORGET this when you
are in the industry. Help yourself and help them, too.
SOURCE: Personal opinion Koperasi KASIH Indonesia |

15. THANK YOU
SOURCE: Personal opinion Koperasi KASIH Indonesia |

16. APPENDIX
SOURCE: KKI Koperasi KASIH Indonesia | 16

17. Our team combines people with diverse backgrounds, expertise and resources,
which has enabled us to effectively tapped into the market
Petrus Partono* Leonardo Kamilius Lucyana Siregar
Role: Commissioner Role: Managing Director Role: Director
38 years old 25 years old 25 years old
Catholic church’s brother Bsc. in Accounting, University Bsc. in Accounting, University
~13 years on people of Indonesia, class of 2004 of Indonesia, class of 2004
empowerment in Cilincing, in 2.5 years with McKinsey & 0.5 year in accounting
areas of education, health, Company, Jakarta, focusing division, Sinar Mas Land
elderly support, employment on operation transformation Involve in various social
creation, housing support and strategy activities in university
Yuswati Denni Pasaribu Rosmida
Role: Field Officer Role: Field Officer Role: Public Relation
39 years old 20 years old 57 years old
High school graduate High school graduate Health cadre for the
Previously worked in Previously worked in last 15 years
institution run by clothing manufacturer Has extensive
Sisters, making bags network in Cilincing
from plastic trashes
Full-time Part-time
SOURCE: KKI Koperasi KASIH Indonesia | 17

18. We BELIEVE that our vision is there to be achieved
Yel – Yel Koperasi KASIH Indonesia
Kami pasti bisa
Mencapai KESEJAHTERAAN
Dengan jujur, disiplin, usaha keras dan doa
Kami akan berjuang
Bekerja dan menabung
Demi keluarga tercinta
Kami PASTI, PASTI, PASTI BISA!!!
SOURCE: KKI Koperasi KASIH Indonesia | 18

19. Most of KKI’s systems were adopted from Grameen Bank, added with some new
ideas and necessary modifications
Description Difference with GB model
• KKI uses Poverty Index • KKI uses its own version of
assessment to determine whether assessment, built from different
Selection
someone can get a loan or not types used in other institutions
• KKI gives continuous training on • Not enough information
different topics and leverages
Education
various methods stressing on
practice to form the good habits
• KKI provides many incentives for • Early version Grameen Bank
Risk good members and applies legal applies collective responsibility;
management action to defaulters Current version does not
• Collective responsibility will be • Some incentives used are taken
applied in in upcoming batches* from Grameen model
• KKI measures 2 lead and 2 lag • Not enough information
Impact indicators: Increase in income and
measurement savings (lead) and house
ownership and ability to send
children to university (lag)
* Thorough assessment shows benefits exceeds cost by far; Method picked will be the one thatts least harmful to members
SOURCE: KKI; Grameen Bank guideline Koperasi KASIH Indonesia | 19

20. Let us know if you have inquiries or want to join our effort ☺
SOURCE: KKI Koperasi KASIH Indonesia | 20